- The Washington Times - Thursday, April 17, 2003

Montgomery County residents will likely pay more taxes on their homes, incomes, Internet access, phones and even movie rentals as government officials struggle to close the largest budget shortfall in a decade.
The county is faced with a $321 million gap between revenues and spending in its $3 billion budget for fiscal 2004. County Executive Douglas M. Duncan and council members attribute the shortfall largely to dwindling state aid and an increase in homeland security costs.
Mr. Duncan proposed a balanced budget last month that includes a 3-cent increase in the property tax and increasing the county's income tax rate from 2.95 percent to 3.2 percent.
"This budget was the most difficult one we have ever done," said Duncan spokesman David Weaver. He also said Mr. Duncan's proposal has more than $150 million in spending cuts and includes eliminating 53 county jobs.
"Several departments were reorganized," Mr. Weaver said. "Taxes weren't the only solution, but part of the solution."
He put some of the blame on Gov. Robert L. Ehrlich Jr. and state lawmakers who have failed to agree on tax increases. While lawmakers have passed a budget that Mr. Ehrlich cannot veto under state law, he has threatened to reject a $139 million tax package from the General Assembly, which could result in further cuts in state spending.
Montgomery County officials already expect $30 million less in state money in fiscal 2004, and officials say the amount will be more if the state makes further cuts.
Mr. Duncan's proposed property tax increase would be in addition to the state's recent increase of roughly 5 cents per $100 of assessed property value.
However, County Council President Michael Subin has said the state increase last month has made the county increase unlikely.
Still, some residents are upset because the state has already imposed a $54 vehicle fee on Montgomery Country residents and several council members have their own tax-increase proposals to generate about $160 million in revenue.
"The only people taking a hit this year are the taxpayers," said Marvin Weinman, president of the Montgomery County Taxpayers' League. "They are penalizing homeowners and looking at them to carry the whole load."
One proposal is to raise residents' fuel and energy taxes, which would increase the average household bill from $20 to $40.
Other proposals include increasing the monthly phone tax from less than $1 to $2 and imposing a tax on high-speed Internet and other telecommunication services, which would range from $2.50 to $15 a month.
Council member Nancy Floreen, at-large Democrat, has proposed a 50-cent tax on the sales and rentals of videos, DVDs, games and other similar items.
Council members have tried to take some of the burden off residents by proposing tax increases for real estate developers that would put more money in public education and transportation coffers.
Mr Weinman said yesterday the taxpayers' league supports the proposal.
A public hearing on the proposed increases is scheduled for April 28.
"Raising taxes are an absolute last resort," said Howard A. Denis, Bethesda Republican, who said he was still looking for more spending cuts.
Mr. Denis also acknowledged his concern about raising taxes during a slow economy.
"The more people pay taxes the less they save and the less they spend on the economy," he said. "That could convert what could be a temporary slowdown in the economy into a full-blown recession."
Mr. Duncan said in addition to paying more for homeland security, he needs money for the first full year of Go Montgomery! his transportation plan to relieve traffic congestion.
The fiscal 2004 budget also includes a $75 million increase for county public schools, 98 percent of the county school board's requested. The money will increase the per student spending and pay for 1,970 more new students enrolled in the schools this year.
Mr. Weaver said residents can expect some tax increases no matter what Mr. Duncan and the council agree upon by June when the budget process is completed.
"The most likely scenario is that everybody will feel the pain in one form or another," said Mr. Subin, at-large Democrat.

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